Public Lecture

Hostility towards trade and finance is not new in human history. The 2008 financial crisis has only re-energized the anti-globalization and anti-finance forces. So, why trade and why finance? In this lecture, we will take a long historical perspective and examine how trade and finance have helped reduce violence and liberate the individual. We take the view that violence is a choice based on cost/benefit calculations, especially when one is left with no viable peaceful options. It is well documented by historians that human violence, as measured by homicide rate and war death, has consistently declined at least since the mid Middle Ages. While modern state formation has contributed to this decline, we will show that trade and finance have also played a significant role. Trade and finance offer human beings better tools for sharing risks across both space and time. As a result, when hit by risk events such as drought, crop failure, earthquake and so on, humans (as individuals or in groups) are less likely to rely on violence for survival. Civilization progress is thus a result of human innovations that allow us to better mitigate risks in advance and cope with consequences of risk events when they do occur. We will also review evidence on how finance helps liberate the individual, especially women. Modernity would not have been possible without trade or finance.